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 -Published: Tuesday, November 19, 2019 U.S. tax law sweeping
up more U.S. expats living in Canada
By the A.M. Costa Rica staff More Canadians expats have become the latest target of U.S. tax laws. The Canadian Broadcasting Corp. is reporting that 900,000 copies of Canadian expats citizens' bank records have been shared with the U.S. Internal Revenue Service. The number of 2018 records is about a third more than was sent the previous year, the news organization said. This is another development with the U.S. Foreign Account Tax Compliance Act that seeks to information from other countries about individuals who may be accidental dual citizens with technical U.S. citizenship. In one Canadian expat case, a senior citizen who was born in the United States and relocated with his parents to Canada when he was a year old is involved in a case with the U.S. I.R.S. A Canadian federal court case failed to prevent the sharing of bank account information with the United States. The case claimed that the turnover to U.S. IRS of private information of a subgroup of Canadian citizens – made only because of threat of harm by the U.S. – violates the Canada-U.S. Tax Treaty and Canada's Charter of Rights and Freedoms. The negative decision by the court this year is now under appeal. The United States has threatened foreign governments that they would lose full access to the U.S. financial markets if they did not comply. Costa Rica is believed to be sharing similar data with the I.R.S. U.S. citizens here and elsewhere in the world have faced problems opening and maintaining bank accounts because of the burden the U.S. law places on foreign banking institutions. Under U.S. law, a U.S. citizen owes income tax on money earned anywhere, although there are exemptions and credits for tax payments to other countries. That could mean enormous sums for the so-called accidental Americans who may hold U.S. citizenship even if they do not know it. Those born in the United States acquire citizenship automatically even if their mother is just passing through. The organization Alliance for the Defence of Canadian Sovereignty is leading the fight against tax sharing by the Canada Revenue Agency with the United States. Elizabeth Thompson of CBC News reported the latest total of shared returns. In all, the Canadian government has shared 2.6 million bank records with the United States, she said. Unlike U.S. citizens, Canadians are not required to pay taxes on money earned overseas. But there is a chance that those who have bank deposits in U.S. Institutions still would be liable for taxes on the interest. U.S. citizens receive an annual exemption of more than $100,000 on income earned overseas, but they still are supposed to pay taxes for Medicaid and they receive a credit for taxes paid to Costa Rica. The U.S. is one of a few countries that enforce a citizenship-based tax system. Nearly all countries have a territorial system where money earned elsewhere their citizens living elsewhere are not taxed. This has led to efforts in the United States to change the law, so far unsuccessful. There are several expat advocacy groups pushing for changes. The Canadian Broadcasting report said that one of those Canadians whose banking information could have been shared with the United States is Conservative leader Andrew Scheer, who is a dual citizen of Canada and the U.S. Toronto lawyer John Richardson says Foreign Account Tax Compliance Act is prompting some Canadians expats to renounce their U.S. citizenship, it added. ------------------------ Should the so-called accidental Americans renounce their U.S. citizenship? We would like to know your thoughts on this story. Send your comments to news@amcostarica.com |
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